GameStop profits down 36%

Game retail giant's revenues dip more than 3% to $1.8 billion, profits sink to $39.7 million, projections lowered; VP says Modern Warfare 2 could be best-selling game of all time.

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In May, GameStop reported record revenues and boosted profits for its first fiscal quarter, but saw its stock price suffer after it lowered its expectations for the full year. Today, the specialty retailer posted its second quarter figures and significantly lowered expectations once again, but this time without the record revenue and profits.

Tough times in Grapevine, TX.

For the quarter ended August 1, GameStop posted revenues of $1.74 billion, down more than 3 percent year-over-year from $1.8 billion. Meanwhile, net profits sank 36 percent to $39.69 million from its 2008 second quarter haul of $57.16 million. The company attributed the slip to sluggish hardware sales, a lack of compelling new titles, and thriftier customers in a tough economy.

Looking ahead to the rest of the company's fiscal year, GameStop again backed off its public projections. Originally, the company projected its full-year comparable store sales to be up between 4 and 6 percent. It reduced that expectation in May, saying same-store sales would be instead be flat year-over-year. Today's revision pegs comparable store sales for the year to be down 4 to 8 percent, thanks to ongoing economic concerns and delays to such titles as BioShock 2, Starcraft II, and Splinter Cell: Conviction.

In a post-earnings conference call, GameStop executive vice president of merchandising and marketing Tony Bartel said there would still be some heavy hitters driving sales this year. For example, he said that Call of Duty: Modern Warfare 2 "has a chance to be the best-selling title of all time," based on the preorder activity it has generated at GameStop stores. The Infinity Ward shooter's "Prestige Edition"--a $150 bundle, including working night-vision goggles--has seen particularly strong preorders, Bartel said. He added that it has driven many customers to upgrade their reservations from the standard edition, "which is a very good sign."

The results once again battered GameStop stock, as shares of the retailer had lost $1.38 as of press time, trading down more than 5 percent to $23.80.

Discussion

272 comments
Mattius04
Mattius04

Gamestop needs to revamp their way of doing business. Selling used games for $3 cheaper than new, and paying $5 dollars so they can re-sell it at at 300 percent of what they paid. They need to lower prices on used products, so they can sell more games! I can buy a used new release game at a local video game store for $45 compared to $57.99 at Gamestop. I just feel ripped off buying a used game for $3 cheaper, I never sell them my games. I just bought Wolfenstein (used) for $45, and I also got to play it before I bought it. You cant do that at Gamestop.

SkateFoxPro
SkateFoxPro

gamestop has to fix up there game seriously i go to any other storie to buy a game and i can get it if its mature my moms gets it with no problem and then when i go to gamestop thats when there gay and keep telling all the adults that you no this games mature and has violence and my mom always says i here you say this every time i come here and she gets mad lol

jimmy8118
jimmy8118

I doubted the fact of the game selling as well as analyists predicted it would, but after reading this, I think MW2 might have a chance of breaking records.

tcstang
tcstang

thats probibly caused by games on demand for the xbox 360 and ps3

banana5
banana5

video games in general are 2 expensive. The system of course has 2 be expensive but the games shouldent be. They should be like 30 bucks then more people would bye them. im stuck at byin um at 60 bucks. good i cant wait till the day were u download all the games on PSN.

LunarAurora
LunarAurora

its about time those cheap bastards began to break down >.> THey give horrible service, pay $2 for a game that they sell for 30, and they're used games are like $3 cheaper.

shadowwyoming
shadowwyoming

@Brain_Fillets I agree with the PC return issue (especially with key code and DRM [cough, Spore, cough]). "I just paid 44.99 for a shopworn coaster!" I know people that don't buy games anymore (they like to rent). This is perfectly fine, and it definitely saves money, but I know there are people out there who feel comfort in knowing that they own the game. I don't rent as much anymore considering I have a tendency to play a game more than once over the course of months/years (Final Fantasy X, for example: if I had rented that game as much as I had played it, I would have paid for at least a half dozen copies), and I have a tendency to buy some games that, unbeknownst to me, become rare and valuable in the future (Suikoden II, Breath of Fire IV, the Shin Megami Tensei Series, etc.). Honestly, I think most people should rent a game once before they commit to buying it if they aren't 200% sure that they will already love the game (I do my research beforehand, look at previews, check out a couple of reviews first if I am unsure, check out what company is behind the game, etc.). It's just a matter of using a little logic before committing. Sure, reviews may be somewhat biased, but if I see something get a 3.5/10 (even if it is something I really want), I'm going to put the brakes on the purchase before I find out why the game did so bad. Everyone has their own tastes and preferences, but it's all about being a little sensible (I believe most people would agree).

Brain_Fillets
Brain_Fillets

@shadowwyoming Those are some solid ideas right there. There is obviously the problem with allowing PC game returns because of the key and ease of ripping then returning. With 360 games though, there aren't nearly enough people with a modded 360 for this to even be a problem. As long as there is some type of fee system in place, it should be an acceptable business practice for them. The only problem I have with it, is that I like supporting local rental services. I prefer not to use Blockbuster, so I'll go to Hastings most of the time. It isn't that much money to rent a game for a week, and doing it that way supports local business and saves Gamestop the hassle of dealing with returns.

huskerman34
huskerman34

maybe if the sales associates werent so freaking rude sales wouldnt be so bad, I think the majority of the problem is customer service. some of these associates can be really rude. Thats why i go to target or best buy

ThisNameIsDumb
ThisNameIsDumb

I prefer amazon, though the shipping of amazon takes a few days the prices of amazon are soooo much cheaper =P.

Hoski0999
Hoski0999

you guys only give me negative feed back because you know i'm right :)

Hoski0999
Hoski0999

@everyone you people do realize the benifits of buying used right? 1) you save a little money (i know its not much) but its still at least five bucks cheaper majority of the time. 2) all you people complaining you buy a new game and cant return it cuz you dont like it..... WELL GUESS WHAT!! you can return your USED game withing 7 days if you DONT LIKE IT. thats right i said it, you can PLAY the game you just bought and if you DONT LIKE IT you can return it for FULL PRICE!!!! dear lord there is a god!!! 3) if you have the EDGE CARD you can save an additional 10 percent off your used games, yes it is 14.99 a year but you get game informer for a year as well. those cost 6 bucks an issue, and 19.99 through a subscriber so in fact they are saving you a ton of money if you buy used and want the magazine. I would love to see someone argue this, because all the complaints i'm seeing are very repetative and people dont see the whole picture. and please stop you whining about the trade prices. they are not twisting your arm tellin you to trade your games or else. They are giving you money for the games you dont want if you want to trade them in. For this economy thats kinda nice if you think about it because idk about you but buying new games at full price is just something i cant do no a days

Hoski0999
Hoski0999

@dentui are you serious?! haha what a joke, NO COMPANY WILLL EVER TAKE BACK AN OPENED GAME IF THEIR SMART!! once it is opened they have to re-sell the copy as a USED COPY since you have ALREADY played it. So your trying to say you want all your money back because you didnt research your game well enough and want Gamestop to pay for it? lol SERIOUSLY WHAT A JOKE!! I'm just gonna tell you to shove it because you are a i want everything my way sort of consumer.

xthabeast
xthabeast

@shadowwyoming I kinda agree.The Trade games deal is bs. Cuzz no one really wants to buy the used crap. And still they would sell used for 5% less than new. Thats horrible -.-

shadowwyoming
shadowwyoming

For Gamestop, there seems to be a real simple, yet effective way to get around the "you open it, you can't return it" rule. If the customers want to return an open game, just charge a flat 15% restocking fee, then give a shopworn discount of 10%. That way, the customers gets most of the money back (consider it a rental price to find out that they didn't like the game). Gamestop makes an additional 5% profit (which is good for them and is a sort of insurance against potential games not being resold). Give them four days to return it (seven days would turn into too much of a rental service). Doing so would bring back the customer loyalty, and stop most of the trade complaints. Along with this, have all stores ban the "employees can check out new games (many of them are already doing this [my location is]," so there are no complaints about the store being hypocritical. If the disk is scratched up (not to the point of being defective, but clearly visible), then revert back to the used trade in value, as the likelihood of re-selling it as a shopworn new product would be much lower (most people would just pay the full retail price).

halomasta1234
halomasta1234

No doubt this could in fact be THE best selling game of all time. And not just because its really that good of a game. Of course, this game will be amazing, but its just the pure anticipation of it that will make it sell so much. The timing is perfect, and this is a type of game that is unique, and new, but not only that, its a SEQUEL! Think about it, Call of Duty was a great series all together. The first one was good, the second one was good, and the third was even better! Then, something new was created. The same great series everyone loves, but it's a modern warfare game! And that game had lots of anticipation, now a whole new one? I know I'll be contributing to its sales.

Glade_Gnarr
Glade_Gnarr

I just hope they stop ass raping people with their used games and the preorder deals BS.

Rottenwood
Rottenwood

@slipknot611 The fact that the policy was dropped is the only evidence we need to know it wasn't a feasible practice. Even if you cut a customer off at one return, you're still essentially selling two games for the price of one. When you consider the already-slim profit margin of new software, you're putting a lot of faith into your customers to keep their first purchase. This faith is misguided, especially when your consumer base skews younger and has nothing else to do besides play a game all day, ensuring they can easily complete it in a week. This is especially problematic when you listen to all the shrieking in this very thread about people wanting to cut themselves because they were sold a new game outside of the original shrinkwrap. Apparently people want to always get a virgin game, but still want to swap out theirs. Is GameStop supposed to toss their returns in the trash? Something had to give.

slipknot611
slipknot611

@ Rottenwood Gamestop wasn't the only one offering this policy, btw. Electronic Boutique did it too. Back then, they took the game you returned, put it back on the shelf and resold it. Kinda like what they do with your returns and trades now, only they pretended that the game you returned was still new. System seemed to work well pretty much throughout the '90's. Sounds absurd, I know, but somehow it worked out well. Buy a game, get to return it once for a new game if you don't like it, if you don't like the second game that's too bad, it's yours. That policy made customers feel as though we weren't being ripped off on the absurd $10-35 they wanted to give us on a trade-in for a brand new game, that's for sure. Deranged or naive is debatable, but the policy worked out much better than what they do now, imo.

enragedrenegade
enragedrenegade

I'm not surprised by this. In fact, it looks like people are starting to catch up on how Gamestop rips them off when buying, selling, and trading in. This should've happened to them even sooner so that they can even consider changing some of their policies when selling and buying games from sellers. Its a terrible business practice.

Rottenwood
Rottenwood

@slipknot611 "One of the only reasons that Gamestop worked so well when they first rolled around was that you could exchange a new game for another new one within seven days. Once they, and then all the others afterward, cancelled that policy? Their usefulness was over." Really, how can anyone expect a retailer to maintain this policy? It's so ripe for abuse, it's laughable. It was an act of deranged, naive trust for Gamestop to have ever offered this policy to begin with.

slipknot611
slipknot611

One of the only reasons that Gamestop worked so well when they first rolled around was that you could exchange a new game for another new one within seven days. Once they, and then all the others afterward, cancelled that policy? Their usefulness was over. Same rules as Wal-Mart and Target, only most times the prices are better at the other retailers AND the games are always new, not already played by the employees. And their buyback prices, which were decent back when they were still Funcoland, have grown seriously skewed since. It's outrageous to be offered less than half the price of a game you just bought from them the day before. Outside of certain preorder bonuses, I don't see much benefit in using Gamestop at all nowadays.

Rottenwood
Rottenwood

@fps_d0minat0r If Infinity Ward could make a game that sells 22 million copies (and counting) "in a week," they probably would. 'Cause, you know, lots of money. I think it speaks volumes of Nintendo's design skill that they can make blockbusters with dated technology.

Spoon_Si
Spoon_Si

MW2 is going to be big.. my local game stop has 160+ 360 & 50+ PS3 preorder all - for Prestige Edition. and not counting the other edition. this game will break sale records... my only problem with GS is the new game policy... Why da fuuk is it open.. and employee renting out new game release is totally uncall for.. and that does not make it new. you get 10+ of the same new games and gut every single copy. I only go to GS for used game sales and maybe preorder bonus.. other then that I go to best buy, instead.

pixiedust35147
pixiedust35147

@Rottenwood Not considering games bundled with systems, wii play (22.98m) IS the all-time king. Kinda sad, everyone knows people only buy it for the wii-mote. New super mario brothers is 5th, i remember when it passed my all time fav super mario 3, I was pissed. I predict MW2 to break 10m sold... might beak the top 20. As for the goggles.... yeah.

dentui
dentui

Gamestop is ridiculously evil. I bought prototype brand new from them. Did not like it and the next day I decided to return it. They said the maximum the could give me was $25 for a game less than a day open and only played once in perfect condition? I literally told them to shove it and decided to sell it on Ebay for $40. A lot of people say "why the hate on gamestop" Because they rip you off so much to get billion dollar profits.

Maverickx25
Maverickx25

I work for them. I still agree with what the plethora of people have said about certain policies and things and if I were in charge, it would change. Fortunately, I have had worse experiences with amazon/Bestbuy(particularly). Can't say I have heard anything about Stream. You want the bottom-of-the-barrel-steaming-pile-of-crap place to get stuff: The Exchange. Now, I will go there on occasion, if they have a really good movie I am looking for a really low price. However, when it comes to everything else, they are unorganized, greedy, unhelpful, grade-a scheisters. Anyway, because most of this topic is just going back and forth, with no clear side having any particular advantage over the other, I declare the topic dead. NEXT

Maverickx25
Maverickx25

@Hoski: That is the smartest comment I have heard all night. Seriously, any die hard madden fan is getting the new one, straight out. No one will one last years outdated model. @ Angelknight: I did notice that too (nice names btw). It seems that those who direct retail propaganda from the other "big" stores get into a big bandwagon and unite under a banner (one of the three companies/businesses you mentioned) to bring down other retail stores. @no one in particular- Again, if you buy a game, brand new and then want to trade it back within the next couple months, you choose your games poorly or just want to subconsciously give yourself reason/s to attack Gamestop. You get a third, which is what I would give back to. It's not their fault that you decided to go with a game that you were done with because it was too hard/short/lame/boring/etc. Yeah, they are sold for five dollars less, but apparently that's all people care about. They don't factor in the 3-4, even 5 benefits you get from either trading in or get used. Honestly, who throws a cupcake?

Chief_Kuuni
Chief_Kuuni

I think it was bound to happen, the economy is just not good for anything at the moment. for games included

taylormadederek
taylormadederek

I think that EVERYONE else selling used games has hurt their business more than they wanted to or would like to admit.

10below
10below

A lack of compelling new titles? Seriously? I hope the stockholders don't listen to that garbage. Gamestop's time is limited anyway. They'll go the way of the video rental stores except for different reasons. Game producers are going to push more and more for downloadable games only (yes, Gamestop provides that service...but they'll have unlimited competition) so no used games equals no Gamestop. Personally, I'm still a little P.O.-ed at Gamestop that they "ran out" of my pre-order freebie...an employee or their friend probably has it in his basement. I kinda have to agree with @Frankvincent about his corn.

youngsexynerd
youngsexynerd

gamestop=store for gamers. so ???? why so much hate???

Sins-of-Mosin
Sins-of-Mosin

Glad to see people are buying new instead of used which is just as bad as piracy as far the pubs are concerned. Buy new, support the dev!

Frankvincent
Frankvincent

My town has both EB games and Gamestop, both stores only ordered 5 ordered Modern Warfare 2 Prestige editions, each. Gamestop is the corn in my crap

cowmaster2k3
cowmaster2k3

All I know is I pre-ordered Modern Warfare 2 Prestige edition at GameStop. As a gamer, I like knowing the fact that there is a major chain store that is dedicated just to my hobby. Can't wait for the Modern Warfare 2 midnight launch! :D

Braddah_B
Braddah_B

Wow, there's a lot of hate in here about GS. Unfortunate to hear about the loss this quater but the way the economy is right now I don't think anyone is surprised. I get annoyed sometimes with their trade in values, but they're the only shop around doing it. Getting SOME money for your old game is better than NONE. They're a corporate company and they're in it to make a profit, deal with it. And for me GS is the only game store in my town so I gues I'm SOL when it comes to options. I'll survive.

Frankvincent
Frankvincent

I dislike GameStop because of there trade in value, They would give me 3$ for NHL 09, when they just going to sell new ones every year, for 70$. I would have more fun smashing the game in the parking lot Glad to see that there plan of ripping people off is working.

Hoski0999
Hoski0999

@KnightAngelX Man i couldnt have said it better, like i said b4 i am a Gamestop employee, and yea the company i work for can be stupid at times trust me I WORK FOR THEM lol. But honestly, you want all us employed to loose our jobs because you couldnt get one more dollar on your trade in's? thank god there are some sane ppl in this world like KnighAngelX

KnightAngelX
KnightAngelX

Oh, and for the people saying I don't buy used because I want to support the developers, you can all go somewhere with that. You aren't supporting the developers when you buy or sell that used game on AMAZON or Cragslist. All you were looking for is the better deal. You didn't like what one company said, and wanted to make part of your profit back. What part of that profit is the developer getting? NONE. SO cut the crap about the retailers not giving used revenue to the companies, because you aren't doing any better selling it at your own price.

KnightAngelX
KnightAngelX

I kind of find it funny how EVERYTIME Gamespot reports on GS, the whole " I hate GS" forum team comes along. Then we get the Best Buy Bunch, The Amazon Alliance, and the Stream Team. ...anyways let me get to the point. Gamestop, IMO, is still not the biggest retailer in video games. WHY? Everyone here named all the other companies that sell games. So guess what? Don't like it, don't rant and rave about why NOT to like it. True, everyone is entitled to their own opinion, that's what forums are for. But then I see that " DIE GAMESTOP DIE" and " I hope they go under" posts and it really makes no arguments. I don't know if anyone knew, but GS started the same way, as a mom and pop shop. Over times, they grew to what they are today. They became corporately owned, started looking at things from a profit point of view to make money.Don't like their trade values, don't trade. It's a company that pays you for your trades, and then has to make the money you just got and then they have to get something for it, and not all the time will they get that money. Your old copy of madden 2005 won't sell nowadays. Don't call me biased either. I do my research on all chains.I like setting things straight when people get dumb with their obsessions. I will agree with the people that say that it's a slow quarter. And remember, a quarter USUALLY lasts for 3 months. So don't posts games like Resident EVIL and Street fighter. Those games came out in February and March

Hoski0999
Hoski0999

Hey guys i know gamestop isnt always fair in everything they do, but whats the deal with you wanting it to go away? They give you free crap for pre-ordering, and will take in games for a set price IF YOU WANT TO. People need to stop complaining about the trade in prices, its a business, they are not going to give you a crap load of money for some old old PS2 games that most likely wont sell. This is how it works kids, Gamestop gives you credit or money for GAMES YOU DONT EVEN PLAY for a set price. Not the price your always looking for but what do you expect when its an old or non high demand game? Gamestop gives you money with no assurance that they will sell that title. Meaning they are giving money away with no 100 percent proof that they will make any profit off what you just traded in. I have people come into my store all the time saying "no one will buy this stuff from me can you take it in?" (Yes i'm a gamestop employee shoot me) and yet we take it in for them knowing no one is going to want that stuff. cry all you want, but gamestop is helping to power game sales and keep gaming afloat, your all just mad because they wouldnt give you what you paid for for some crappy games you dont play anymore. Here's a little tip for ya then, do some research before you buy your games, not just pick up something your not gonna want in a few months. And to whoever stated we charge 70 bucks a game, your an idiot, we charge the standard 59.99 as most stores do.

chesucks
chesucks

BRAWLL probably couldn't get a job there, so he's pissed.

kyram_3
kyram_3

BRAWLL why do u want gamestop to die its the only game store around that sells good games

Video-Game-Dude
Video-Game-Dude

Well gamestop is the place around here that sells used games and that would suck if you had to buy all games at wal-mart that doesn't sell used games.

BRAWLL
BRAWLL

yes gamestop is finally diying YES!!! GAMERS REJOICE!!

kurse71
kurse71

[This message was deleted at the request of the original poster]

aserbianguy
aserbianguy

I hope gamestop can rebound, gotta pre order MW 2